Article Courtesy of The Orlando Sentinel

By Mary Shanklin   

Published December 1, 2015

Nicely landscaped town homes at Berkshire Park near Windermere are less than a decade old but show signs of spider-web cracking and water damage — and owners see no fixes in sight.

Problems came to a head in the summer when homeowner association President Jeff Tepper tried to hire painters to freshen up the buildings, but the contractors declined the job. They were concerned the paint job would quickly ruin because of underlying cracks and discoloration.

Orlando attorney David Tegeler, a construction specialist, said problems at Berkshire Park are pervasive. Each of the 71 units tested had construction flaws, and many had excessive moisture and rot within the walls, said Tegeler. He is employed by Winter Park attorney Michael Sasso, who represents three owners seeking arbitration, but total numbers aren't known because the process isn't public.

   
Owners cannot turn to the courts for relief because their contracts with Pulte Homes, the builder, require them to go through binding arbitration for any issues — and to file each request individually.
Unlike a court case, arbitration is usually based on a decision by an arbitrator who is appointed by a group, such as the American Arbitration Association. Both sides present evidence at hearings that are conducted outside the courts. Judges rarely consider an appeal of an arbitration decision.

To try to resolve the matter, one homeowner paid a mandatory $1,000 arbitration filing fee to resolve problems on his town home but heard nothing back from Pulte and ended up also paying the builder's $2,800 share of arbitration filing fees, which the homeowner can recover. Of 140 town homes, half were inspected by engineers, and all of those showed construction defects. At least three unit owners are pursuing construction-defect claims.

"All of Pulte's deadlines to pay have come and gone," Sasso, who represents homeowners there, wrote to the American Arbitration Association last month. The contracts with Pulte do not ensure any time frame for resolution.

A Pulte spokeswoman said that even though the company calls for binding arbitration, which limits any appeals process, "most of the time, many of these claims are resolved through mediation and/or negotiation."

 
The builder scheduled a voluntary mediation for one homeowner first in December and then rescheduled it for February. If nothing gets resolved at mediation, then the matter will go to a binding arbitration, said spokeswoman Valerie Dolenga.

 
Sasso said Pulte's actions only work to postpone much-needed repairs. Meanwhile, the buildings degrade further, and structural problems become even more serious, he added.
"It's a delay game," he said. "They just push it off and off and off."

 
Tepper, the HOA president, and his wife bought their three-bedroom unit with 1,644 square feet in 2009 for $183,000, which was about $70,000 more than midpriced sales for condos in Metro Orlando at the time. Newly retired at the time from a position as principal financial analyst for Suffolk County, N.Y., he said they purchased a new home because they wanted to be free from problems common in older homes.

  
Rather than banding together into one legal settlement, Berkshire Park owners who want to complain must each file arbitration requests individually, according to the contract they signed with the builder.

 
"You've got 140 Davids against a big Goliath," Sasso said.

 
Arbitration has become an increasingly popular dispute-resolution method in recent years, particularly for consumer-finance companies. Consumer advocates generally say it restricts consumer rights and remedies. The Consumer Financial Protection Bureau earlier this year released a report showing federal courts in some districts awarded higher damages to consumers than arbitrators in those districts did during 2010 to 2011. Companies that use it, though, say it's a more cost-effective way to resolve disputes than the courts.

 
Dolenga, of Pulte, said the company will work toward resolving owners' issues. 

"We are hopeful that a reasonable solution can be met to appropriately address their concerns," she said.

 
Tepper said he has been criticized by some homeowners who fear construction-defect conflicts will erode their values. Owners are required by law to disclose building problems to any prospective buyers. Even short of them disclosing, Sasso said the visible cracks would have a "chilling effect" on sales.

"We've lost some sales here because of this," he said.